Self-employed persons, who are not classified by the tax authorities as freelancers according to § 18 of the Income Tax Act, are automatically subject to trade tax as traders. However, there is a voluntary allowance for individual entrepreneurs and partnerships, which is currently at 24.500 Euro.

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Community economic control

Officially, the trade tax is called municipal tax Incidentally, municipal tax. What is trade tax paid for? You pay trade tax on your trade income. This results from the income from a commercial activity minus the operating expenses.

However, in the case of this operating profit as determined by the Income Tax Act, some reductions are still made or bills added. What remains then is the trade income. A tax consultant should help you with the exact calculation.

What is the tax rate?

If your business income exceeds 24.500 Euro per year, you will pay a uniform tax rate of 100 percent for this amount (rounded down to a sum that can be divided by 3,5 Euro).

But beware: legal entities of public law and associations of private law, which run an economic business, as well as some others Companies (for example, pension and health insurance funds, settlement companies, total port operations and health insurance medical services) that are exempt from corporate income tax, have only an exemption of 3.900 Euro.

All other companies, which are neither sole proprietorships nor partnerships nor belong to the group listed above, pay the 3,5 percent trade tax of the first hundred of their trade income.

How is the commercial tax calculated?

How much the business tax is actually depends on where you have settled your business. The height is determined individually by each municipality.

If you want to calculate the trade tax precisely, you must first calculate the tax amount. This results from the trade income less the allowance (usually 24.500 Euro per year). The result is multiplied by the measure of 3,5 percent.

The amount of the tax depends on the tax rate

The actual amount of the tax now depends on the rate of levy, which is set individually by the municipality. Inquire with your church about the levy rate. In general, this is higher in larger cities than in small towns.

You can find an overview of the trade tax records of the larger cities on the website of the German Chamber of Industry and Commerce. To calculate the tax height, the tax amount is multiplied by the stock rate and divided by a hundred. The result is then the amount of the tax you have to pay.

Attention: No negative commercial tax

As a sole trader or partnership (but not as a corporation!) Subject to trade tax, you have an income tax reduction of 3,8 times the trade tax base, which is deducted from the income tax liability.

This amount may even be higher than the trade tax calculated above, but there is none negative trade tax.

Appointments

You have to submit the trade tax return once a year. If the tax office asks you to do so, you have to make advance payments one, two or four times a year.